Centro CEO Riegsecker Discusses New Brand Exchange, The 'Wall Street' Analogy And More

Centro CEO Shawn Riegsecker recently discussed his company with AdExchanger as well as Centro's workflow software known as Transis.

In addition, the company just launched Brand Exchange for digital, display advertising, which the company describes as "an invitation-only exchange to connect brand advertisers with a unique group of premium publishers."

AdExchanger: Let’s start with the merger of MediaBank and Donovan Data Systems into MediaOcean which has helped bring workflow and its opportunities in digital to the fore. What's your take on the transaction? Centro has its own workflow solution in Transis, of course.

SR: MediaOcean has exactly the right idea. Frankly, those two companies make much more sense together than they did apart. From a vision standpoint, MediaOcean and Centro are incredibly aligned with what the industry needs. The question becomes, “Who can execute better on their business model going forward?” So, I believe the merger is a net positive for the whole industry.

Also, we hear so much talk about ad exchange inventory - there's a lot of folks that believe it's all going to head in that direction. But I believe there's a cap to what's going to be what I'll call “publicly transacted on.” It could be as low as 30 percent with it perhaps rising to 50 percent one day.

Centro believes that the best inventory - the premium, guaranteed inventory - isn't going to be available there. It's still going to be transacted directly between a buyer and a seller.

Software must come into this industry and fix the incredibly broken and inefficient process that takes place with the transacting of media - that's what Centro does and that's also what MediaOcean's plan is.

How is Transis, Centro's workflow software, doing today?

Centro worked with 470 agencies last year that represented over 1,700 advertisers. So, from a standalone digital company, we're one of the largest independents out there. Everything we do runs on top of the software that we've been building for the last few years. We own and operate the most efficient media planning and buying software. And, publishers work with Centro to transact every day.

From a revenue perspective, our revenue base today primarily comes from our relationship with the agencies that we service on more of a business services relationship. Going forward, when Transis comes out of beta in May, it will be the first time in which we'll actually begin charging for the software. We believe that the software revenue piece of our business is going to ramp aggressively over the next two years.

It starts with the brand promise we give to the industry today - "Experts in Media Logistics." The key phrase being this concept of media logistics. It's the logistics of our industry that create pain and make it hard for agencies and the advertisers to scale digital operations. When we looked at our company and all of our products and resources, we put them into three very distinct products that actually fulfilled the brand promise of being experts in media logistics.

The first is what we call shared services or outsourcing services where we work with agencies. That's how they use us today. The second is that we own the most efficient media logistics software - Transis.

Then the third product is our Brand Exchange, which is the highest quality inventory available from any type of an ad network on ad exchange. That's how the company's structured.

[Regarding] Brand Exchange, it’s good to have a bit of history with respect to how it came into being. Back in 2009, a lot of the publishers were sick and tired of their relationships with ad networks, the fact that people weren't giving them fair value, and that they were taking publishers’ data. So, publishers got together and asked us back in '09 if we would consider helping them monetize their unsold inventory at a higher value than what they're getting from the other ad networks. We did - and through 2010 and 2011, it became a much bigger piece of our business.

We spent all of 2011 building the ad exchange software and are announcing the brand exchange [this] week.

What problem is Brand Exchange solving? And how does it differentiate?

The problem in the exchange industry is that everyone talks about creating greater value for publishers' inventory. The reality is that there's no ad network, exchange, DSP or SSP that are living up to the promise that people have been talking about now for four years.

What we have is an industry where all the companies are trading impressions back and forth. And none of those companies have well-trained, premium sales individuals who know how to have a strategic conversation with a client and extract what we'll consider to be fair value inside of the transactions.

The Brand Exchange is not an open exchange that anyone may come into either. It's invitation only to the publishers and we decide which advertisers to bring in.

It also gives publishers more control - they need to approve any client that will start running on their inventory. They are able to set all the different floors and minimums as needed.

And, we've chosen a partner which will give publishers full data protection on any of the advertisers running inside of the Brand Exchange - and full transparency into what's taking place within their data.

But, the major differentiator between what we're doing for the industry versus what others are doing: Centro has one of the largest, best trained premium salesforces in the country. What that means is we're actually out there sourcing directly from agencies and advertisers – and not trading back and forth with other ad networks or ad exchanges. Therefore, when we go in, we bring the [publisher] CPMs up.

Today, the Brand Exchange has close to 2,000 publishers . We have first rights and at the highest level of any tags that are set on their pages for their unsold inventory. That's because we bring them CPMs that are greater than anything they're getting from any other SSP, DSP, or ad exchange relationship.

How do you make money with Brand Exchange?

Centro is a media company [whose revenue is] based upon a margin on the media. But we're not taking the large margins that we've seen ad networks and ad exchanges historically take in the past.

Looking across your platform, what's harder to find, great advertisers or great publishers?

The company who's got the “pole position” (first look) is the most valuable partner to publishers. When you have that pole position, you can activate advertisers. On the client side, there are a lot of great clients who have people who think the web is a direct response medium and they're not using it as a brand building or engagement medium. Finding clients who are sophisticated [when it comes to] client engagement and brand building on the web are hard to find - but we know it's going to get there even though it may take a couple of years.

Do you anticipate needing more funding?

No. Centro has always been profitable and [the most recent] funding was to allow us to get more aggressive with our products and give us cash so that we may invest or acquire other companies going forward.

Has there been any impact on Centro due to real-time bidding?

It hasn't affected Centro greatly because most of our brands are dealing with more guaranteed, direct, premium inventory. Real-time bidding hurt companies in the direct response space - such as the ad network category. Centro has felt very little movement away from us into the RTB space.

Do you see a more programmatic side coming to the guaranteed media world? The Wall Street analogy would be a "futures market."

TheWall Street analogy is a point people love to make. Here's what the industry says: “What happened in stocks is going to happen in advertising and we're going to create an exchange where everyone can buy and sell.” Advertising isn't the same as stocks. Every piece of advertising, on some level, has different attributes to it, whether it's the environment or the context, the brand, the size, etc.

Here's what I think people miss - advertising is going to look similar to the equity markets when you look at public and private equity.

In advertising, we're going to have public inventory that people can buy and exchange but then there's going to be private inventory. What we know is this - the good inventory in equities isn't public. The best deals are in private equity.

In order to get access to the good inventory in equity you've got to make a phone call or you've got to deal with someone in order to make that transaction take place. Same is going to happen in the advertising industry. There's going to be a lot of not-so-good inventory that's publicly available, but the best inventory is still going to be bought privately between companies.

At Centro, we're automating 70 percent of the relationship between two parties. We have electronic contracts and ad server integration. There's no email. There's collaboration inside the browser. We're doing that today.

We believe that the private advertising market will always be much larger than the public advertising market.

[Consequently,] I don't think there is a need for a futures market in advertising. Advertisers are going to want to lock up all of the premium inventory that they want in the beginning of the year, but since our industry currently operates such that you can easily get out of that commitment within a 30-day window, there's no need to have a future on it. The only way we would need a futures market is if you were left “holding the bag” on inventory, but that's not the reality today.